Jinghe integration resumes Science and Technology Innovation Board's listing review: the change fund-raising project of "changing guns in the face of battle" closely catches up with United Power and SMIC.

At a time when TSMC, United Power and other wafer foundry set off a new round of price increases, panel-driven wafer foundry Hefei Jinghe Integrated Circuit Co., Ltd. (hereinafter referred to as "Crystal Integration") once again promoted Science and Technology Innovation Board's journey of IPO. The company not only resumed the listing review, which was suspended for three months, but also submitted the second round of audit inquiry response materials to the exchange and updated the relevant financial data.

Jinghe Integration once again explains the focus issues concerned by the exchange, such as entrusted operation, inter-industry competition, supplier overlap and so on, and expounds in detail the differences between it and the future development of LSMC. Science and Technology Innovation Board Daily reporter learned that the company's 55nm process research and development has made phased progress, 55nm touch and display driver integrated chip will enter mass production in the first quarter of 2022.

It is worth noting that Jinghe Integration changed the fund-raising project during the listing review process, and reduced the fund-raising amount by 21% to 9.5 billion yuan. An investment manager of a venture capital firm told Science and Technology Innovation Board Daily that "changing guns before the battle" may be based on the consideration of meeting the application needs of downstream mid-and high-end products and controlling the scale of production capacity.

Mass production of 55nm process platform is just around the corner.

In the second round of audit inquiry letter, the exchange once again paid attention to the core issues such as the entrustment of Jinghe integrated operation, the identification of the actual controller, and the competition with Liji Power Co., Ltd.

Jinghe Integration replied that during the implementation of the entrustment Management contract, only part of the terms were fulfilled, and the terms such as the assignment of the operation and management team and day-to-day operation management were not actually implemented. The company and Lijing Technology are independent of each other and do not regard it as Lijing's subsidiary factory in the mainland.

To this end, the company once again obtained a "confirmation letter" from the Hefei municipal government, which not only confirmed the above cooperation, but also made it clear that Hefei SASAC was its actual controller. Hefei Urban Construction controls 52.99% of the company through direct and indirect means, and the first chairman is determined by both parties through consultation, and is not a Lijing technology employee.

In terms of business, although Ligex and Crystal Integration Chengdu can provide 12-inch 150nm, 110nm, 90nm semiconductor wafer foundry, there are great differences in specific production and services, and Crystal Integration has obvious advantages in some chip fields. A business person from a South China chip manufacturer told Science and Technology Innovation Board Daily: "designers have strong stickiness to wafer manufacturers and match adaptability to product parameters and performance, technology and technology, which is not a simple substitution relationship."

In terms of future development planning, Crystal Integration is also significantly different from LSMC. Crystal Integration plans to create four IC characteristic process application product lines: display drive, image sensing, microcontroller and power management, and continuously promote the process node to become the first panel-driven wafer generation factory in the world. On the other hand, Liguten enhances its comprehensive service capability around wafer foundry such as memory products, logic and special application products.

Science and Technology Innovation Board Daily reporter learned that Jinghe integrated 55nm process research and development has made phased progress. Among them, the 55nm touch and display driver integrated chip platform has completed pre-production debugging and plans to enter mass production in the first quarter of 2022; 55nm logic chip platform has been developed and introduced into customer trial production in the first quarter of 2022.

The above-mentioned business personage frankly said that after the breakthrough of the integrated 55nm process process, the product line layout became richer, which exerted pressure on Huahong and other characteristic process manufacturers. However, from the future development trend, 150nm~90nm DDIC may still be an important position for panel-driven wafer generation factories.

It is reported that large-size DDIC accounts for more than 70% of the total demand of DDIC, which is the terminal panel product with the largest demand for DDIC. In the relationship of the number of DDIC required by each terminal product, the higher the resolution, the more DDIC is required. For example, the DDIC required for an 8K TV is greater than 20 (per unit), while that for a tablet computer is only 23.3 (per unit).

Silicon wafers and equipment rely on overseas procurement

Benefiting from the strong demand in the downstream application market and the rising prices of the industrial chain and other factors, the business performance of Jinghe integration has improved significantly. Updated financial data show that the company achieved a revenue of 1.6 billion yuan from January to June in 2021, exceeding the 1.51 billion yuan for the whole of 2020; a net profit of 122 million yuan, a year-on-year turnround to profit; and a gross profit margin of 28.85%, slightly more than SMIC and Huahong Semiconductor.

Among them, the revenue of 90nm process, 110nm process and 150nm process accounted for 58.6%, 22% and 19.4% respectively. The number of chips sold in the first half of the year reached 216400, accounting for 82% of the total sales in 2020. The average unit price of chips is 7403 yuan per chip, 29.31% higher than the average price in 2020. By the end of June 2021, the number of products ordered by the company was 473500 pieces, with an order amount of 4.075 billion yuan.

The overlap of customers and suppliers should still be the focus of the second round of inquiry materials. In the aspect of crystal integration, it is emphasized that there is no order complementarity between the company and Lijing technology, and the downstream driver display chip design industry is highly concentrated, and the products and services provided by different manufacturers are quite different.

In terms of raw material supply, the company's total purchase amount of the top five suppliers of raw materials accounts for 50%-65% of the total purchase of raw materials. Among them, silicon wafers mainly come from more than 96.00% of Global Wafers Co.,Ltd.,; in terms of equipment procurement, although new photoresist removers from Yitang Semiconductor, cleaning equipment from Shengmei Shanghai, measuring equipment from Guangliwei, physical deposition equipment and furnace tube equipment from North Huachuang, 95% of the equipment is still purchased from abroad.

It is worth noting that within a week after receiving the second round of review inquiry letter from the Shanghai Stock Exchange (August 12, 2021), the board of directors of Jinghe Integration examined and passed the "motion on changing the listing project". The company not only changed the fund-raising project plan, but also reduced the fund-raising scale by 20.83% to 9.5 billion yuan.

According to the new fund-raising plan, Jinghe Integration plans to invest 4.9 billion yuan in the research and development project of advanced technology of Hefei Crystal Integrated Circuit, 3.1 billion yuan in the acquisition of factory buildings and factory facilities in the manufacturing base, and 1.5 billion yuan in replenishing working capital and repaying loans. Among them, the advanced process R & D projects include the research and development of rear-illumination CMOS image sensor chip process platform, microcontroller chip process platform, 40nm logic chip process platform and 28nm logic and OLED chip process platform.

It is reported that if the above advanced process research and development projects are implemented smoothly, Crystal Integration will have the technical ability to produce afterlight CMOS image sensor chips, microcontroller chips, 40nm logic chips, 28nm logic chips and other products. The original investment project is mainly for production expansion, which is used to build a 12-inch wafer foundry production line of 40,000 wafers per month.

"it is rare to adjust fund-raising projects in the initial audit process. Judging from the new planning plan, the company has accelerated the trend of catching up with advanced technology. " An investment manager of a venture capital institution told Science and Technology Innovation Board Daily that Jinghe's foray into 40pm 28nm has not only shortened the gap with United Power, SMIC and other manufacturers, but also been able to meet the needs of downstream customers in the field of middle and high-end products such as AMOLED display driver chips. In addition, from a historical point of view, overcapacity after the decline of the industry boom will be a drag on performance, the company may consider relevant factors to deal with in advance.

For issues such as changes in the company's fund-raising projects, reliance on external procurement, and new customer development, a reporter from Science and Technology Innovation Board Daily contacted Jinghe integration insiders and sent an interview outline, but had not replied as of press time.